We are about to ring out the Old Year and to ring in The New. And all thinking citizens are anticipating a year of intense political activity in view of three successive electoral consultations that are pending.

As is to be expected, politicians on both sides of the political divide will concentrate on their topmost political objective, which has to do with the nature of Malta's future relations with the European Union, namely, whether Malta is to opt for EU membership or a form of partnership chosen by other countries that maintained their relationships with the EU without joining the Union as full members.

This debate, which has been raging for years in these islands, will reach its climax. From the national standpoint, it is as vital as it will be unquestionably decisive. Even so, so long as it lasts, it will distract attention from Malta's core problem, which is to survive in a world of unyielding competition.

Whether Malta joins the EU as a member or not, it has to earn its living. Survival depends on its ability to earn its keep by its own efforts. It can only do so by competing for markets and by being able to sell its goods and services in a climate of rapid globalisation.

Policy-makers and economic analysts alike have been talking endlessly about the need to attract high-tech, high-yielding investment, about the absolute need to adopt an outward-orientated approach in our decision-making and about the need to expand our bridgeheads in the world's export market.

These objectives have gained common currency. Some self-appointed economic gurus find them useful as incantations and mantras at management study sessions. Behind them lie stern realities.

These realities take time to sink in developing island economies, large or small, for a number of reasons which include isolation from the evolutionary stream that is rapidly shaping and giving new momentum to technological and economic development.

It takes time to absorb the consequences of mass discharges of workers as big manufacturing firms restructure to cope with falling demand - as in the recent case of Fiat in Italy.

In a world of unforgiving competition, market forces are driven by economic imperatives. Investment decisions are not based on sentimentality or traditional loyalties. Investors are quick to migrate to emerging economies where wages are cheaper and more profits could be realised.

In the final analysis, the key to competitiveness is quality and the relative cost. China, Vietnam, and east European countries are offering opportunities, as well as inducements, to investors and are siphoning off work from developed countries. The investors they attract have established markets which they can serve on competitive term.

This threat faces small developing economies like Malta. Our challenge is to keep costs down, productivity up and entrepreneurial freedom must be allowed to be exercised without undue restraint.

These, and the commitment of trained workers and the team spirit with the firm, may enable European businessmen to compete and survive in the face of the challenge coming from lower-paid workers in the so-called emerging markets.

The realities of comparative costs will continue to overshadow our future.

What could be done to improve Malta's competitiveness? The most obvious solution is to identify the right high-tech partners and to devise ways to promote investment partnerships.

When SGS-Thomson Microelectronics Asia Pacific entered into an agreement with the Shenzen Electronics Group of South China to build a new 258,000 square foot plant for a total investment of $77 million, the Chinese side put up 40 per cent of the initial investment. We must think boldly on the same lines although not necessarily on the same scale.

Trade unions must move with the times and be ready to negotiate terms that link pay with performance.

Modern human relations must be sufficiently flexible to absorb new skills and to acquire new performance standards based on multi-skills situations rather than the 'single performance of one skill'. Collective agreements should by all means safeguard minimum standards - but they ought to make allowance for the recognition of individual performance while rewarding input and commitment.

The swim-together, sink-together collective formula that favours indexed pay rates while imposing restrictive practices is becoming self-defeating.

Malta's competitors are racing ahead. European workers cannot be work-shy and enjoy rising living standards at the same time. Moreover, capital-intensive industries have to utilise their capital 24 hours a day all the week if they are to remain competitive.

This is not to say that the workforce has to be treated like a cog in the machine. Forward-looking economies must generate a work ethic based on responsibility, flexibility, and the opportunity of continued improvement through the acquisition of new skills and a system that rewards productivity. Every effort ought to be made to instil a feeling of pride in a job well done and self-satisfaction in an atmosphere of stability.

One way of doing this is to follow in the footsteps of SGS-Thomson in Malta where the workforce has been truly empowered to become involved to think and to suggest on how to achieve optimum quality and productivity. In that firm, each worker has an individual identity and is not considered as a faceless number.

The environment Malta needs to create is not one driven by the exhortation that it has to compete. The workforce must be encouraged to believe in its ability to be the best and to lead and hold its own.

Such an approach recognises the individual worth of each worker and distances the workforce from the notion of a collective mass, going to and returning routinely from the workplace anonymously, unappreciated and unesteemed.

The workforce is a partner in the enterprise of wealth creation and deserves due reward in proportion to productivity.

In the global market, it is competitiveness that prevails in the last analysis. At all costs, Malta must learn to face the realities imposed by the rules of market competition.

There is no other way to keep and improve our living standards.

To fail is to perish. This is why we cannot afford to be distracted by politicians with the wrong sense of priorities.